Renting Vs. Buying

With every rent check you write, you're helping to build equity in your landlord's property. That money could be going toward building equity in a home of your own.

Rent prices usually go up over time. So do home prices. While you cannot control what you pay for rent, you can control what you pay to live in your own home. The point is, life gets more expensive over time, and the only way to secure your housing future is to own a home.

Most everyone knows the advantages of buying over renting: Equity that builds over time. A safeguard against inflation. Tax-deductible mortgage payments. The satisfaction of living in a home that you can improve or modify to your liking without worrying about a landlord.

But coming up with a down payment, qualifying for a loan, and finding a suitable home in the neighborhood of your choice can be setbacks to ownership. So here are few things to consider when weighing one option against the other:

How long you plan to stay: Buying usually is better the longer you stay, since your upfront fees are spread out over many years.

Tax liabilities: Property taxes and mortgage/interest costs are important, and probably tax-deductible. Be sure to consult your tax adviser to understand all the tax advantages of homeownership.

Closing costs can add up: Fees for home inspection, title search, and mortgage insurance are part of the home-buying process. Plus, you’ll have moving expenses when you buy or sell. Talk to your agent and let him or her help you develop a strategy that will keep these fees to a minimum.

Maintenance and upkeep: Owning a home means paying for things that renters typically do not. They can range from painting and carpeting to water bills and trash pickup. Setting up a “Home” savings account will help keep “Murphy’s Law” at a comfortable distance.

Deciding between the flexibility of renting and the potential long-term reward of homeowning is on the minds of many would-be buyers. Want to take a stab at crunching the numbers yourself? This interactive calculator from realtor.com examines the most important costs associated with buying a house, and computes the equivalent monthly rent.